Sustained demand propelled by industrial production and economic growth coupled with the adoption of innovative technologies are expected to position the mining industry for continued growth and profitability. Moreover, as clean energy transitions gather pace, demand for critical metals and minerals is increasing sharply.
Given the industry’s bright outlook, investors could consider buying fundamentally sound miner stocks Kinross Gold Corporation (KGC), Centerra Gold Inc. (CGAU) and Amerigo Resources Ltd. (ARREF) with solid momentum this month.
In recent years, demand for metals and minerals has surged significantly, driven by increased industrial production and economic growth. Global reserves of metals and minerals are mined for profit and used in several industrial applications, jewelry-making, and investments.
The global mining market is projected to reach $2.78 trillion in 2027, growing at a CAGR of 6.7% during the forecast period (2023-2027). Favorable government policies to support the mining industry will drive the market’s expansion.
Meanwhile, The gold mining market is expected to grow to around $260 billion by 2030, exhibiting a CAGR of nearly 3.5% from 2023 to 2030.
Furthermore, clean energy technologies, ranging from wind turbines and solar panels to electric vehicles (EVs) and electricity networks, need a wide range of rare metals and minerals such as copper, nickel, cobalt, manganese, and graphite. The rapid clean energy transition presents ample opportunities for metals and mining companies.
According to a report by the International Energy Agency (IEA), if the world is to meet net zero as a global goal, the demand for critical metals and minerals will soar six times by 2040 compared to today’s requirements.
For efficient mining operations, mining equipment, materials, and machinery play a vital role. The global mining machinery and equipment market is estimated to total $113.35 billion in 2027, expanding at a CAGR of 9.8% during the forecast period.
In addition, advanced and innovative mining technology employs machine learning, robotics, location awareness, big data, additive manufacturing, AI, and other technologies, assisting mining companies in automating most of their processes and enhancing productivity and efficiency.
Given the industry’s promising growth prospects, investing in fundamentally strong miner stocks KGC, CGAU, and ARREF could be wise for steady momentum.
Let’s discuss the fundamentals of these stocks in detail:
Kinross Gold Corporation (KGC)
Based in Toronto, Canada, KGC engages in the acquisition, exploration, and development of gold properties internationally. The company is also involved in the extraction and processing of gold-containing ores, reclamation of gold mining properties, and production and sale of silver.
On August 23, KGC signed a formal definitive option agreement with Aurion Resources Ltd., which granted Kinross the right to earn up to an undivided 70% interest in the 42.74 km² Launi East Property by incurring a minimum of $10 million in exploration expenditures on or before completing the seventh anniversary of the deal.
On August 4, KGC announced the acceptance of notice by the Toronto Stock Exchange (TSE) to renew its normal course issuer bid (NCIB) program. Under the program, the company can purchase up to 108,440,227 of its common shares, representing up to 10% of its public float of 1,084,402,272 common shares.
Under the NCIB program, the company is authorized to purchase shares during the period beginning August 9, 2023, and ending on August 8, 2024. KGC believes the purchase of the common shares would be in the best interest and an attractive and appropriate use of available funds.
KGC’s metal sales from continuing operations increased 28.7% year-over-year to $1.10 billion in the third quarter that ended September 30, 2023. Its gross profit grew 54.2% from the year-ago value to $317.90 million. Its adjusted net earnings from continuing operations came in at $144.60 million, or $0.12 per share, up 110.5% and 140% from the prior year’s quarter, respectively.
In addition, the company’s adjusted operating cash flow from continuing operations surged 81.4% year-over-year to $470.60 million. Its cash and cash equivalents were $464.9 million as of September 30, 2023, compared to $418.10 million as of December 31, 2022.
Analysts expect KGC’s revenue and EPS for the first quarter (ending March 2024) to increase 6.5% and 8% year-over-year to $990.10 million and $0.08, respectively. Also, the company surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
KGC’s stock has gained 17.9% over the past six months and 35.9% over the past year to close the last trading session at $5.72. The stock is currently trading above its 50-day and 200-day moving averages of $5.29 and $4.91, respectively, indicating an uptrend.
KGC’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Growth, Quality, Value, and Sentiment. Within the Miners - Gold industry, KGC is ranked #4 of 42 stocks.
Click here to access additional ratings of KGC for Momentum and Stability.
Centerra Gold Inc. (CGAU)
Headquartered in Toronto, Canada, CGAU is a gold mining company that engages in the acquisition, exploration, development, and operation of gold and copper properties in North America, Turkey, and internationally. The company explores for gold, copper, and molybdenum deposits.
On November 3, CGAU announced that the Toronto Stock Exchange (TSX) had accepted its renewal of a normal course issuer bid (NCIB) to purchase for cancellation up to an aggregate of 18,293,896 common shares during the period starting on November 7, 2023, and ending on November 6, 2024.
These shares represent nearly 8.48% of Centerra’s total issued and outstanding common shares, or 10% of the public float. The company believes that the NCIB will provide it with a flexible tool to deploy a portion of its cash balance in accordance with its capital allocation framework.
On October 31, CGAU announced a quarterly dividend payment of C$0.07 ($0.05) per common share – approximately C$15 million ($11.04 million). The dividend was paid on November 29, 2023, to shareholders of record as of November 15, 2023. Its annual dividend of $0.20 translates to a yield of 3.72% at the current share price. Its four-year average dividend yield is 2.77%.
For the third quarter that ended September 30, 2023, CGAU’s revenue grew 92.1% year-over-year to $343.89 million. Its earnings from mine operations were $114.60 million, up 251.5% year-over-year. The company’s adjusted net earnings came in at $44.40 million, compared to an adjusted net loss of $15.90 million in the prior year’s quarter.
Furthermore, the company’s adjusted earnings per common share was $0.20, compared to an adjusted net loss per share of $0.06 in the previous year’s period.
Street expects CGAU’s revenue for the fourth quarter (ending December 2023) to increase 68.5% year-over-year to $351.01 million. For the fiscal year 2024, the company’s revenue and EPS are expected to grow 1.9% and 1,190.3% from the prior year to $1.13 billion and $0.50, respectively.
Moreover, CGAU has topped the consensus revenue estimates in each of the trailing four quarters.
Shares of CGAU have gained 5.8% year-to-date and 9% over the past year to close the last trading session at $5.48. The stock is trading above its 50-day moving average of $5.34, indicating an uptrend.
CGAU’s POWR Ratings reflect bright prospects. The stock has an overall grade of A, translating to a Strong Buy in our proprietary rating system.
CGAU has an A grade for Growth and Sentiment. The stock also has a B grade for Value and Quality. It is ranked #3 among 42 stocks within the Miners - Gold industry.
To see the other ratings of CGAU for Momentum and Stability, click here.
Amerigo Resources Ltd. (ARREF)
ARREF produces and sells copper and molybdenum concentrates from Codelco’s El Teniente underground mine in Chile through its subsidiary, Minera Valle Central S.A. The company is headquartered in Vancouver, Canada.
On November 28, ARREF announced approval from the Toronto Stock Exchange to proceed with a new normal course issuer bid where the company may purchase for cancellation up to 10,900,000 common shares, forming nearly 10% of Amerigo’s public float as of November 24, 2023.
The NCIB commenced on December 2, 2023, and may continue till December 1, 2024, or at such earlier time as the NCIB is completed or terminated at the company’s option.
“We are pleased to announce the renewal of Amerigo’s ability to buy back shares for cancellation, which is one of our tools to return capital to shareholders,” said Aurora Davidson, Amerigo’s President and CEO.
On October 30, ARREF’s Board of Directors declared the company’s ninth consecutive quarterly dividend. The dividend of C$0.03 ($0.02) per share is payable on December 20, 2023, to shareholders of record as of November 30, 2023.
ARREF pays an annual dividend of $0.09, which translates to a yield of 9.38% at the prevailing share price. Its four-year average dividend yield is 3.55%.
For the third quarter that ended on September 30, 2023, ARREF reported revenue of $30.30 million. The company’s EBITDA grew 100% from the year-ago value to $3.20 million. Its operating cash flow before changes in non-cash working capital remained flat compared to the prior year’s quarter at $2.60 million.
Analysts expect ARREF’s revenue and EPS for the next fiscal year (ending December 2024) to increase 17.1% and 1300% year-over-year to $187.29 million and $0.14, respectively.
Shares of ARREF have surged 5.2% over the past month to close the last trading session at $0.94. The stock is currently trading above its 50-day moving average of $0.90, indicating an uptrend.
ARREF’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
ARREF has a B grade for Value and Quality. It is ranked #2 out of 43 stocks in the Miners - Diversified industry.
In addition to the POWR Ratings we’ve stated above, we also have ARREF ratings for Growth, Momentum, Stability, and Sentiment. Get all ARREF ratings here.
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KGC shares were trading at $5.66 per share on Tuesday morning, down $0.06 (-1.05%). Year-to-date, KGC has gained 42.04%, versus a 21.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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